PHD Capital

SEBI has directed mutual funds to stop using misleading illustrations in advertisements

Market regulator #SEBI has directed mutual funds (MFs) to stop using misleading illustrations in advertisements, brochures and presentations to depict that there will be fixed return on investments.

It asked AMCs to refrain from such practices in future and remove such advertisements from all the medium and to advise their distributors not to use them.

Running an Asset Managing Companies is a Risk Free Business.
In 2008, all Mutual funds lost 60%. But they still earned the fixed income as their Total Expense Ratios.

Since 2012 till 2022, #Nifty Index has not witnessed a negative year. Therefore obviously Mutual funds “sahi lagta hain”

Next 10 years, Do you think that, the same dream run is going to repeat?
We are already talking about recessions in 2023 now. Interest rates are hiking and companies are struggling to get debt at reasonable interest rates.

Bajaj finance is no more giving 100% cagr like it used to give.
The Adani’s dream run as a multi bagger is over.

The #MutualFunds are back to traditional nifty top 10 stocks. For Your information Mutual Funds, They park 60% of your money in large caps.

SEBI who is aware of this says,
“It has been noticed that some of the Asset Management Companies are indulging in practices relating to advertisements, which are not in letter and spirit compliance with the Advertisement Code prescribed in SEBI (Mutual Fund) Regulations, 1996”

SEBI said the illustrations show future returns on the basis of assumptions and projections.
Though disclaimers and assumptions are in fine print, it is likely to be missed out by the investors.

Also the ads use the best two humans we all know.
The best captain – Dhoni and God of cricket – sachin.
They are giants, whom we all love and respect. They have influence over us. We trust these men. Their words could convince even a bald to buy comb !

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